How to Divide Business Assets with Divorce

A divorce may involve many moving parts, but when business assets are at stake, the process becomes even more complicated. Understanding how business interests are divided under Illinois law is crucial in pursuing a fair outcome. The team at Sabuco Beck, P.C. is here to help provide some clarity when it comes to dividing business assets in divorce.

Defining Marital and Non-Marital Property

Under Illinois law, property must be sorted into two categories during divorce proceedings:

• Marital Property includes any assets acquired during the marriage, such as income earned, homes bought, or businesses initiated while married.
• Non-Marital Property refers to assets acquired prior to marriage, or gifts and inheritances for one spouse specifically. 

It can be common for disputes to arise when property falls into a gray area between marital and non-marital. 

Business Interests Acquired During the Marriage

If a business started during the marriage, it’s typically categorized as marital property. The court will then divide it equitably between the spouses based on factors like:

• Each spouse’s contribution to the business.
• The financial state and custodial needs of each spouse.
• The future earning potential of each party. 

The value of the business also plays a major role in dividing it during divorce proceedings. An accurate assessment of a business’s value is often necessary; this evaluation requires a thorough understanding of both the legal and financial aspects involved, and professional guidance is recommended. 

Business Interests Owned Before Marriage

A business owned before the marriage is generally considered non-marital property. Any increase in the value of the business during the marriage typically remains non-marital unless marital assets or efforts were used to grow it. 

However, the court may re-evaluate its classification if joint funds or labor were used to contribute to the business. 

Transmutation

One critical legal concept in property division is transmutation. Transmutation occurs when non-marital assets are treated as marital property, blurring the lines between marital and non-marital property. It’s important to note that if it is unclear whether property is marital or non-marital, courts generally will favor defining it as marital and, therefore, subject to division during the divorce process.

Ensuring a Smooth Division of Business Assets

Dividing business assets is never simple, but understanding your rights and the classification of property in Illinois divorces is the first step toward a more informed decision. Other key points to remember:

• Accurate valuations of all business interests and assets are crucial.
• Clear documentation of business finances can help protect your assets.
• Legal pitfalls like transmutation require proactive management and professional advice. 

At Sabuco Beck, P.C., we are dedicated to helping clients protect their interests while achieving equitable resolutions. Whether you’re a business owner or a spouse seeking a fair share, you can benefit from the legal guidance of our knowledgeable Joliet divorce lawyers. 

If you are working through a divorce and dealing with business assets, you do not have to face it alone. Contact Sabuco Beck, P.C. today to schedule an appointment and gain a trusted advocate in your divorce proceedings.